New issuance of non-mortgage ABS surged to $49.68 billion in the first quarter of 2014, a strong 33.0 percent increase from the previous quarter, according to a new Inside MBS & ABS market analysis and ranking. The first three months of 2014 represented the strongest quarterly ABS issuance number since the third quarter of 2009, when $53.27 billion of new deals were issued. It was up a modest 1.7 percent from the strong start in 2013. All the major asset classes posted...[Includes two data charts]

Standard & Poor’s announced late last week that it placed 96 ratings from 20 servicer-advance ABS on watch for a potential downgrade and the rating service plans changes to its rating criteria for servicer-advance ABS. Industry analysts suggest that the actions could disrupt the market for servicer-advance ABS, as S&P has been the dominant rating service in the sector. S&P said downgrades on servicer-advance ABS are possible because the analysis that accompanied ratings on certain deals didn’t consider subordinated interest amounts as part of the ratable promise. “The CreditWatch placements reflect...

The Securities and Exchange Commission late last week gave the securities industry another month to file comments on a proposed rule that most participants already know they don’t like. Comments were originally due March 28 on the SEC’s latest proposal to require asset-backed securities issuers to make loan-level details about pending issues available to investors on their own websites, rather than the agency’s Electronic Data-Gathering, Analysis and Retrieval system. On the day the comment period ended, the SEC extended it to April 28. Many issuers and large banks think...

Investors plan to increase their holdings in what are known as esoteric ABS – such as container, timeshare, whole business and franchise loans, structured settlements and solar and renewables – more so than consumer or commercial ABS, according to a new survey from the DBRS credit rating agency. Higher-yield opportunities are likely a key reason investors will look toward esoteric assets in a period of exceptionally low interest rates, the survey found. “Over the next 12 months, market participants are...[Includes two data charts]

Issuers of MBS and ABS are concerned about new liabilities they are likely to face if they have to disclose loan-level information at issuance under a rule recently proposed by the Securities and Exchange Commission. In February, the SEC proposed requiring issuers to disclose loan-level data to investors on issuers’ own websites instead of on the Electronic Data-Gathering, Analysis, and Retrieval system, better known as EDGAR, the current platform for SEC-required disclosures. The comment period on the proposal was scheduled to close March 28. Preliminary comment letters submitted...

Bipartisan mortgage-finance reform legislation from leaders in the Senate focuses on replacing Fannie Mae and Freddie Mac securitization programs with a new government MBS guaranty, but it also includes options for MBS issued outside the proposed agency-like structure. Sens. Tim Johnson, D-SD, and Mike Crapo, R-ID, this week revealed the text of their Housing Finance Reform and Taxpayer Protection Act, which may have little chance of passage this year but may be the starting point for reform in the next Congress. Johnson-Crapo would create...

An affiliate of Nationstar Mortgage is preparing to issue an ABS backed by servicer advances and deferred servicing fee receivables, continuing a trend of nonbank servicers fueling their growth via securitization. Industry analysts suggest that the deals offer good returns to investors, even with regulators increasing their scrutiny of nonbanks. The $1.96 billion servicer advance ABS from New Residential Investment is expected to close on March 18, according to a presale report by Standard & Poor’s. The deal is set to receive a AAA rating from the rating service. “Based on the nature of the assets which historically display high recovery typically at the top of the waterfall, we would view...

Fannie Mae and Freddie Mac sold some nonprime mortgage-backed securities during 2013 even though the government-sponsored enterprises have seen strong returns on these holdings in recent quarters. The GSEs held a total of $84.61 billion in nonprime MBS as of the end of 2013, according to a new analysis by Inside Nonconforming Markets. The holdings declined by 18.2 percent compared with the end of 2012 due to a combination of ... [Includes one data chart]

A coalition of California municipalities is preparing to issue a $104.40 million ABS backed by proceeds from Property Assessed Clean Energy assessments. The Federal Housing Finance Agency has raised concerns about PACE loans, but industry analysts suggest that the FHFA doesn’t pose much of a risk to the planned ABS, even though a significant portion of the PACE loans in the deal are on properties with mortgages backed by Fannie Mae and Freddie Mac. Kroll Bond Rating Agency said 31 states have passed legislation allowing municipalities to create PACE programs. The programs allow local governments to finance renewable energy and energy efficiency projects on privately-owned properties. The Home Energy Renovation Opportunity program is a PACE program that helps finance energy-efficient upgrades and improvements such as solar, heating, ventilation and air conditioning, windows, roofing and water-saving products. HERO Funding Class A Notes, Series 2014-1, is set...

The Securities and Exchange Commission was set to vote on a final rule earlier this month that would set new disclosure requirements for non-agency MBS, but the agency is still considering how the final rule should be applied as industry participants clamor for further changes. The SEC this week re-opened the comment period regarding the pending requirements for disclosures on MBS and ABS, the so-called Reg. AB2 rule. The rule was first proposed in 2010 and re-proposed in 2011. The comment period on the second proposal closed...